Theatre’s future

A night out at the movies can get very costly, especially when you factor in traffic, parking and concessions. It all adds up, and many prefer binge-watching movies and TV shows in the comfort of their homes. It’s less expensive and less of a hassle to just Netflix and chill.

Theater chains have to fill empty seats, and they’re pulling out all the stops: full-service restaurant-quality food and drinks served to patrons’ luxurious reclining seats, with an up-charge. But still, some of those seats remain empty. So what does it take to get movie lovers off their couches and into the theater?

Theaters have to fight back against Netflix by becoming more like Netflix. The streamer is not only changing the playing field for at-home entertainment but also how movie theater chains run their businesses, and they are fighting back against Netflix and other streaming platforms with monthly subscription plans that are in many ways similar to the streamers’.

Regal Cinemas just announced an unlimited movie ticket subscription plan, Regal Unlimited, a program that is expected to officially start within the next few days. Regal’s customers will pay $18 to $23.50 a month in what is considered the boldest subscription offering to date among the top three theater chains in the U.S.: AMC, Regal and Cinemark. Customers can see as many films as they want on a standard format screen depending on their location—the bigger the city, the more expensive it will be. Los Angeles and New York are among the cities that will pay more. And customers will have to commit to 12 months.

Members paying $18 will have access to 200 of Regal’s 564-plus locations across the country that are in smaller markets. The middle-tier customers will pay $21 for entry into 400 cinemas, and the top-paying customers will shell out $23.50 to go to any Regal theater, including L.A. Live in Los Angeles and New York’s Regal Union Square. Additional perks include a 10% discount on concessions and a free popcorn on your birthday.

In June, AMC, the largest theater chain in the U.S., reported a hefty uptick with its monthly subscription service, AMC Stubs A-List. Not only did the service just celebrate its first birthday, but it did so with 860,000 subscribers, which was much higher than the 500,000 subscribers it expected. With AMC Stubs A-List, moviegoers can see three movies per week, in premium IMAX and 3-D formats, for $20 to $24 a month depending upon location. The app allows users to choose their showtime and seats from their phone and makes choosing a movie as easy as finding something to watch on Netflix, Hulu or Amazon Prime Video. Besides the ease and convenience with the service is the ease on the pocketbook.

Cinemark, the third-largest theater chain in the U.S., allows its moviegoers to pay $8.99 a month for one free ticket, as well as discounts at the concession stand and other perks.

Netflix got us hooked on paying for our entertainment à la carte on a monthly basis and this is what younger generations are now used to. Amazon Prime Video, Hulu and the soon-to-be streaming services from Apple and Disney, in addition to the fact home setups are becoming more affordable, is forcing theater chains to update the way in which they do business.

“Netflix has proven that the American appetite for subscription-based entertainment has only just begun and is actually lagging behind China, Spain, Italy, Singapore and New Zealand,” says Chief Attribution Officer at C3 Metrics, Jeff Greenfield. “Theater chain revenues will soar with subscriptions and also bring the potential to sell analytics data and fulfill the failed MoviePass business plan.”

In 2018, analysts at eMarketer researched how many internet users worldwide believed they’d be using more subscription services within two years. In China, 53% of respondents said they would. This was followed by Spain (42%), Italy (40%) and Singapore (38%). Stateside, 34% of respondents said they planned to go with more subscription services by 2020.

Netflix started the streaming ball rolling with at-home streaming services in 2007 and then in July 2011, MoviePass started its service with an initial beta test in San Francisco, with the hopes of letting people see a movie a day for a monthly fee in an effort to become the “Netflix of movie theaters.”

Though box office revenue in North America last year hit an all-time high of nearly $12 billion, it has declined this year, with cost and content quality a factor. To combat this, theater chains have realized the monthly subscription model could also work for them.

“Everyone is moving to subscriptions in entertainment,” says Stephan Paternot, co-founder and CEO of online film finance marketplace Slated. “It’s a total win-win. For the distributors and theater chains it’s a much more stable, predictable revenue stream, which in turn, smooths out the revenue bumpiness of big-hit movies versus big bombs. This, in turn, helps reduce risk and subsidizes the riskier, less commercial independent movies. This is a huge win for filmmakers everywhere. Not to mention, it will increase butts in seats and hugely increase concession sales, which is the theaters’ biggest profit center. This leads to better unit economics. MoviePass was loved to death in part because they couldn’t implement additional revenue streams quickly enough to offset their losses on ticket sales.”

Paternot sees an additional plus for theaters. “Another very big advantage in the context of theater subscriptions is the direct relationship the theaters will be able to build with individual audience members. It’s hard to overstate how powerful a marketing tool that can be. Theater chains will know what movies I’ve seen, and thus be able to anticipate what movies I’ll be likely to see in the future and promote them to me in time to get me out to the theater to see them.”

And, Paternot explains the big advantage Disney+ is going to have. “That one-to-one relationship with their customers will enable them leverage to drive additional downstream purchases, whether by offering Disney+ for free with a purchase of a cruise or promoting theme park events or what have you.”

However, Paternot sees one major obstacle. “Most people tend to go to the same local theater chains to see all their favorite movies, and they will already be subscribing to a few streaming services, so most people will likely end up only subscribing to one (or max two) theater chains. So, likely a big consolidation of theater chains will happen until there are just two or three in each city.”

Now, it will be interesting to see what happens with Netflix as a filmmaker when it releases the new Martin Scorsese film, The Irishman, which is expected to be out later this year. The question is, will it be released only on its streaming platform, or also in the theater like Roma?